PIC: Eskom loan in the best interests of SA economy | Fin24
 
  • Mboweni on State Capture

    The new finance minister has described state capture as a 'great public sector heist'

  • Kganyago on Populism

    The central bank head says SA must learn economic lessons from Venezuela and Zimbabwe.

  • Up in the Air

    Uber Air could see SA shoppers flying to malls via skyports, says a company executive.

Loading...

PIC: Eskom loan in the best interests of SA economy

Feb 13 2018 21:00

Cape Town - The Public Investment Corporation (PIC) has again hit back at criticism of its recent R5bn loan to Eskom, saying if it did not extend the loan the power utility risked a default that would have "collapsed the domestic economy". 

The PIC, which manages the assets of state pensioners via the Government Employees Pension Fund (GEPF), came in for criticism from trade unions earlier in the month over whether the loan was a solid investment. 

On Tuesday the PIC said in a statement that "false, misleading information continues to be presented to the media and into the public domain" around the loan. 

"This creates unnecessary anxiety amongst pensioners, GEPF members and their dependents, and public sector employees about potential risks to their pensionable savings and benefits," it said. 

It noted that the loan had to be repaid within a month, was backed by a state guarantee and would earn the PIC "above the benchmark" interest rates.

The statement added that the GEPF was a defined benefit fund, which means it is guaranteed by the government.

'Best interest of the South African economy'

The PIC argued it was in the interests of all South Africans that that the loan to the cash-strapped power utility was extended, despite criticism from trade unions including The Public Service Association

"When the PIC board approved the bridging finance to Eskom, it took into account the best interest of the South African economy, the interests of its clients and the fact that the PIC was acting in accordance with the GEPF investment mandate," it said. 

Without this investment, Eskom would have been unable to service its debt which would have led to a default and the breaking of its debt covenants with financial institutions during the first week of February 2018. This would have resulted in a cross default of all government obligations with catastrophic consequences that would have collapsed the domestic economy."

Eskom will have to pay back the loan, plus interest in early March. 

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

psa  |  pic  |  eskom
NEXT ON FIN24X

 
 
 
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

The Data Market Inquiry:

Previous results · Suggest a vote

Loading...